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Soft futures move higher; Coffee extends rebound from 7-year low

Published 11/11/2013, 07:47 AM
Investing.com - U.S. soft futures were higher on Monday, with coffee prices moving further away from last week’s seven-year low as market players returned to the market to seek cheap valuations.

On the ICE Futures U.S. Exchange, Arabica coffee for December delivery traded at USD1.0498 a pound, up 1.15%. Arabica prices rose to USD1.0563 a pound earlier, the highest since November 4.

The December contract settled 0.1% higher at USD1.0405 a pound on Friday.

Traders returned to the market as a round of bargain-buying and short-covering kicked in amid speculation prices fell too far too fast.

The December contract slumped to USD1.0100 a pound on November 7, the lowest since October 19, 2006.

Coffee prices have been a on a downward trend in recent months, as traders monitored improving crop prospects in Brazil and Colombia.

Brazil is the world's largest producer and exporter of Arabica coffee, while Colombia is the world's second largest.  Arabica is grown mainly in Latin America and brewed by specialty companies.

Meanwhile, sugar futures for March delivery traded at USD0.1813 a pound, up 0.2%. Prices of the sweetener traded in a range between USD0.1804 a pound, the daily low and a session high of USD0.1814 a pound.

The March contract ended 0.22% higher on Friday to settle at USD0.1808 a pound.

Sugar prices have weakened recently as concerns over a disruption to supplies from Brazil eased. The March contract fell to USD0.1793 a pound on November 7, the weakest level since September 30.

Brazil is the world's largest sugar producer and exporter, with the U.S. Department of Agriculture estimating the nation accounts for nearly 20% of global production and 39% of global sugar exports.

Elsewhere, cotton futures for December delivery traded at USD0.7737 a pound, 0.65% higher. Cotton prices traded in a range between USD0.7649 a pound, the session low and a daily high of USD0.7763 a pound.

The December contract ended up 0.16% on Friday to settle at USD0.7688 a pound.

The U.S. Department of Agriculture raised its forecast for global cotton inventory for the 2013/14 crop year to a fresh record high of 95.71 million bales, citing higher supplies in India and the U.S.

Futures dropped to an 11-month low of USD0.7527 a pound on November 5 amid concerns over a slowdown in demand from China, the world’s largest cotton consumer.

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